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Decision analysis

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Question 1

a.)
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b.)

For

the

company to make a maximum profit the company should consider building a large factory18 to

maximize production. The company should the observe for an initial reception being favourable and

thus maximise sales which in this case means a large profit is expected. We calculate this as

follows:

Big factory with favourable reception = 600

%profit from sales=180%

total expected output=(180/100)*600

=1080

profit=1080-600
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=480/=

C.)

Expected value is calculated as:

EV=∑P(Xi)×Xi)

where EV=Expected value

and P=Probability

P=50%=1/2

EV=(1/2*600)+(1/2*350)+(1/2*550)+(1/2*300)

EV=900

D.)

Given that in this case we do not have knowledge of reception, our variables are considered to be

continous and our analysis with be considered a multiple continous analysis.

EV1=(1/2*600)+(1/2*350)+(1/2*550)+(1/2*300)

=900

EV2=(1/2*150)+(1/2*50)+(1/2*200)

=200

EV=EV1-EV2

=700

E.)

Utility function measures consumers' preferences for a set of goods and services. The feeling of

well-being that consumers experience as a consequence of choosing and consuming a certain

product or service is referred to as utilitarianism. In order to evaluate the utility of one product in

contrast to another and to quantify the usefulness of a product quantitatively, economists analyze

customer behavior. The utility research that executives do is used to guide their sales and marketing
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tactics, as well as their promotions and new product offerings. In contrast to ordinal utility, which

categorizes alternatives according to their preferences, cardinal utility measures the amount of

benefit received from a selection.

Question 2

Performing thought experiments in which the substantive knowledge of a domain expert is used is

known as counterfactual analysis (CAM). It is necessary for the changes to make use of causative

combinations for which there were either no cases or not enough instances, and it is also necessary

for the user to contribute a significant amount of substantive information about the cases into the

modification process. As a consequence of BSM, each changed complex solution is known as a

counterfactual, and each counterfactual is typically less complicated in its structure than the

complex solution. If the complex term does not change as a result of IM, the complex solution itself

becomes the counterfactual. The set theory operation union is used to combine the counterfactuals

for all of the complex terms once they have been acquired for all of the complex terms. These

words are found in the (set of) intermediate solutions, which is the outcome of the RI term search

process. The following transformation occurs from a subset of simplified intermediate rules to a

subset of credible simplified intermediate rules: As a result, it is necessary to re-compute the

consistencies of the RSI simplified intermediate summarizations. This is necessary because CA

does not make use of the fuzziness of the causal circumstances and outcomes, and as a result, this

linkage back to fuzziness must be recreated. When one or more of the simplified intermediate

solutions have a consistency that is much lower than 0.80, this indicates that they should not be

trusted, as an example.
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References

C. Fiss, “Building better causal theories: a fuzzy set approach to

typologies in organization research,” Academy of Management J.,

in press, 2010.

D. J. Hand, H. Mannila, and P. Smyth, Principles of Data Mining, Boston, MA: MIT Press,

2001.

J. Kacprzyk and A. Wilbik, “A comprehensive comparison of time series described by

linguistic summaries and its application to the comparison performance of a mutual fund and its

benchmark,” in Proc. FUZZ-IEEE’10, Barcelona, Spain, pp. 25-32, 2010. J

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